Speak out against FirstEnergy plans

April 12, 2013

When Allegheny Power merged with Ohio-based energy giant FirstEnergy in 2011, we were promised merger synergy benefits. However, the only "benefits" electric customers have seen lately are inaccurate billing, disappearing meter readers and rate increases.

Now FirstEnergy has proposed an intercompany sale of assets between affiliates that will cost the average West Virginia customer of Potomac Edison $90 per year in higher power bills. FirstEnergy has proposed that its regulated subsidiaries, Mon Power and Potomac Edison, purchase the company's coal-fired Harrison generation plant from the company's unregulated subsidiary, Allegheny Energy Supply Co.

The proposed sale price of Harrison is a cool $1.16 billion. The value of Harrison was adjusted upward during merger accounting, and what was a $500M asset owned by Allegheny Energy in 2011 has now become a $1.16B asset owned by FirstEnergy in 2013. In addition, Harrison needs several environmental upgrades to comply with future EPA regulations. You'll pay for that, too.

The location and operation of the plant won't change. The only thing that will change is who pays for it. Harrison is currently owned by FirstEnergy's unregulated generation subsidiary. This means the plant's operating cost is paid for by the company and rolled into the price of its product in a competitive market. An expensive plant means an expensive, uncompetitive product. However, in West Virginia's regulated environment, the plant and its operating costs will be paid for entirely by Mon Power and Potomac Edison customers. We must pay whatever it costs to operate the plant, even if cheaper power is available from other sources. FirstEnergy is shedding an expensive, uncompetitive liability into a regulated market, where it is guaranteed full cost recovery, plus return, and no longer has to compete with cheaper generators.

FirstEnergy claims Potomac Edison and Mon Power will soon be facing a generation shortage, but refuses to seek bids to supply needed generation through a competitive process to secure the cheapest resources. Instead, FirstEnergy did its own skewed evaluation to claim purchasing Harrison is the cheapest option. Other options, such as purchasing low-priced power from PJM's competitive market, building a new gas-fired generation plant or decreasing demand through energy efficiency were not fairly considered. The cheapest power plant is the one you never have to buy or build.

FirstEnergy reported a loss for the fourth quarter of 2012. Demand has not rebounded and competitive power prices have fallen. The company needs to raise some serious cash to bolster its sagging balance sheet and is relying on this plant sale as a bail out. Ohio-based FirstEnergy is looking for a little corporate welfare from West Virginia's regulated electric consumers.

FirstEnergy is selling West Virginians a pig in a poke. Tell the West Virginia Public Service Commission you do not support FirstEnergy's proposal and ask that they reject the plan for higher rates. You may submit comments to the PSC online or send a letter to 201 Brooks Street, Charleston, WV 25301. Be sure to include the case number 12-1571-E-PC on your comments.